i

SERVICE QUALITY AND CUSTOMER SATISFACTION IN

HOTELS IN NAIROBI, KENYA

CHARLES WATIKI

A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS OF MASTER OF BUSINESS ADMINISTRATION (MBA),

SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI

NOVEMBER, 2014

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DECLARATION

I declare that this research project is my original work and has never been submitted to

any other university for assessment or award of a degree.

Signature……………………………………………..Date……………………………….

Charles Watiki

D61/61461/2010

This project has been submitted with my authority as the university supervisor.

Signature…………………………………….Date……………………………

Michael. K. Chirchir

School of Business,University of Nairobi

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ACKNOWLEDGEMENTS

I feel indebted to the team of people who contributed towards successful completion of

this project. My sincere appreciation goes to my supervisor, Mr. Chirchir and my

moderator Mr. Mulwa for their support, counsel and guidance throughout the research

period. I am also grateful to my family members for their encouragement during the

study period.

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DEDICATION

This is dedicated to my dear family;my wife Esther and my daughter Quinter for being

patient with me during my absence. They provided me with moral support to complete

the project.

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TABLE OF CONTENTS

DECLARATION.………………...……………………….………………………………ii

ACKNOWLEDGEMENTS ….…………...………….…………………………….……iii

DEDICATION…………………………………………….….……………….…………iv

LIST OF TABLES...........................................................................................................viii

LIST OF FIGURES............................................................................................................ix

ABSTRACT………...……………………………………..…………………...…………x

CHAPTER ONE: INTRODUCTION…………………..……........................................1

1.1 Background of the study…………………..………………………………..................1

1.1.1 Service Quality………………………………………………………………………2

1.1.2 Customer Satisfaction……………………….………………………………………4

1.1.3 Hotel industry in Kenya……………………………………………………………..5

1.2 Statement of the problem……………………………………………………………...6

1.3 Research objectives………………………...………………………………………….8

1.4 Value of the study……………………………………………………………………..8

CHAPTER TWO: LITERATURE REVIEW……………………..………………….10

2.1 Introduction………………………………………………………………………….10

2.2 Service Quality……………………………………………………………………….10

2.3 Determinants of Service Quality……………………………………………………..10

2.4 Measurements of Service Quality……………………………………………………14

2.4.1 Models for specific service settings………………………………………………..14

2.4.2 The SERVQUAL Model……………..……………………………………………15

2.4.3 Performance Only Model (SERVPERF)…………………….……... …………….16

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2.5 Empirical Studies on Service Quality………………………………………..………17

2.6 Customer Satisfaction………………………………………………………………..19

2.6.1 Factors affecting customer satisfaction……………………………………….……19

2.6.2 Empirical Studies on Customer Satisfaction……………………………………….20

2.7 Relationship between Service Quality and Customer Satisfaction……………..……21

2.8 Summary of Literature Review………………………………………………………22

2.9 Conceptual Framework……..……………….……………….………………………23

CHAPTER THREE: RESEARCH METHODOLOGY……………………………..25

3.1 Introduction………………………………………………………..…………………25

3.2 Research Design……………………………………...………………………………25

3.3 Target Population…………………………………………………………….………25

3.4 Sample Size……………………………………………………………………..……26

3.5 Data Collection…………………………………..……………………………….….26

3.6 Data Analysis…………………………………...……………………………………27

CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION.………...28

4.1 Introduction…………………………………….………………………………….…28

4.2 Results…………………………………….………………………………………….28

4.2.1 Respondents general information………………………………………...………..28

4.2.2 Reliability of the results ………………………………………………...………….31

4.3 Perception of factors influencing customer satisfaction…………………………..…31

4.4 Service Quality and Customer Satisfaction……………………………...………….34

4.4.1 T Test for regression coefficients………….………………………………………34

4.4.2 Coefficient of determination, R2……………………………………………….….36

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4.4.3 F Test for the full model……………………………………………………….…..36

4.5 Discussion……………………………………………………………...…………….37

CHAPTER FIVE: SUMMARY, CONCLUSION AND

RECOMMENDATIONS……………………………………………………………….39

5.1 Introduction……….………………………………………………………………….39

5.2 Summary of Findings……………………………………………………..……...…..39

5.3 Conclusion………………………………………………………..………………….41

5.4 Recommendation……………………………………………………………….……41

5.5 Limitations of the study and suggestions for Further Research…………...……..…..42

REFERENCES………………………………………………….……………..……….43

APPENDICES…..…………………..…...……………………………………….....…..47

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LIST OF TABLES

Table 2.1: Ten dimensions of service quality…………...……………………………….11

Table 2.2: Five dimensions of service quality……………...…………………...………12

Table 4.1: Respondents general information……………………………………………29

Table 4.2: Factors influencing customer satisfaction. …………………………….……32

Table 4.3: Regression coefficients of the five dimensions of service quality………..…44

Table 4.4: Regression statistics…………………………………………………..………36

Table 4.5: Test For significance………………………………………………………….37

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LIST OF FIGURES

Figure 2.1: Service quality and customer satisfaction relationship………………......….23

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ABSTRACT

High level of competitiveness in the marketplace in which hospitality industries such as

hotels function has been one of the main reasons why service quality and customer

satisfaction have become of great importance. In the hotel industry, for example, satisfied

customers tend to return and make profit to the hotel. The hotel’s top management’s main

objective therefore, is on how to maximize customer satisfaction. This project had two

objectives: To determine factors influencing customer satisfaction and to examine the

relationship between service quality and customer satisfaction among hotels in Nairobi,

Kenya.

Performance Only Model (SERVPERF) which was developed by Cronin and Taylor

(1992) was used to develop a questionnaire which was later distributed to respondents

from across hotels in Nairobi. Descriptive statistics and Regression analysis were used to

establish the factors influencing customer satisfaction and bringing out the relationship

between service quality and customer satisfaction. All the five service quality variables

yielded positive relation with customer satisfaction. This means that service quality is

strongly linked with customer satisfaction and the higher the service quality, the higher

the customer satisfaction. The results further reveal that reliability dimension contributes

most towards customer satisfaction followed by Empathy, Tangibles and Responsiveness.

Assurance was seen to contribute the least. However all the dimensions were highly rated

and therefore the hotels cannot afford to ignore any of the variable.

From the analysis, it was also established that service quality has a statistically significant

effect on customer satisfaction with a coefficient of determination (R2) of 74.2%. This

implies that service quality contributes 74.2% of customer satisfaction while the other

factors contribute 25.8%. The researcher recommended that future studies could look into

the nature of these other factors that contribute 25.8% of customer satisfaction.

This study contributes to the existing studies examining service quality and customer

satisfaction in the hotel industries. The results from the study could be helpful to the

management of hotels in their policy formulation in the context of improving customer

satisfaction and service loyalty. The researcher recommended that since this study

focused only on hotels within Nairobi, future studies could look into more areas such as

Mombasa and Naivasha which are key tourist sites.

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CHAPTER ONE: INTRODUCTION

1.1 Background of the Study

One of the most effective tools in hotel Industry success is service quality. Juran (1988)

defines quality as “fitness for use” while in Crosby (1979) quality is defined as

“conformance to requirements”. Mitra (2000) on the other hand views quality of a

product or service as “the fitness of that product or service for meeting or exceeding its

intended use as required by the customers”. Considering the hotel industry, bringing

about quality has complication that differs from when tangible product is involved.

Parasuraman et al., (1985) noted that it was inappropriate to use a product-based

definition of quality when studying the service sector. They therefore developed the

expression, “service quality”.

Service quality refers to the difference between customers' expectations of service and

their evaluation of the services they received (Parasuraman, Zeithaml, and Berry, 1985).

It is perceived as subjective since it relies on the judgement of the customer. However, it

is an important concept in influencing the extent and nature of customer satisfaction

experienced after service delivery. According toGronroos (1984); service quality is

dependent on two variables: expected service and perceived service. Expectations are

beliefs about the level of service that will be delivered by a service provider and they are

assumed to provide standards of reference against which the delivered service is

compared(Bitner et al,2003).If there is congruence between the performance and the

expectations, then a customer is said to be satisfied.

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Various models have been proposed to measure service quality. Lehtinen and Lehtinen

(1982) proposed that service quality can be measured by its physical, corporate and

interactive quality whereas Le Blanc (1992) suggested a variety of factors such as

responsiveness, corporate image and accessibility as some of the factors used to evaluate

service quality.However, the most popular model for measuring service quality is the

SERVQUAL model developed by Parasuraman et al. (1985) and engenders five

determinants of service quality presented in order of importance, reliability,

responsiveness, assurance, empathy and tangibles.

This study focused on service quality and customer satisfaction: a case of hotel industry

in Kenya. The hotel industry is highly service oriented as through the experiences,

customers’ form opinions by comparing the service encounters against their expectations.

The hotel industry in Kenya is experiencing increasing competition with major

international hotel brands increasingly setting up operations in Kenya. This is set to

increase the competition in the hotel industry. To survive in this dynamic and highly

competitive business environment the hotel operators will be forced to critically

acknowledge the importance of service improvement in order to gain competitive

advantage.

1.1.1 Service Quality

Service quality is defined as customer’s perception of how well a service meets or

exceeds their expectations (Parasuraman, Berry and Zeithmal 1985). Service quality is

often judged by customers and not by the organization itself (Abbasi, Khalid, Azam and

Riaz, 2010).Martin (1999) suggested that a service is characterized by attributes such as

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intangibility, heterogeneity, perishability and inseparability which delineate a service

from a good which further complicates the evaluation of the performance of a service.

This creates the need for an organization to develop new models or use already existing

models to measure the performance of the services and the perceptions that customers

have towards the company.

Parasuramanet al. (1985) mention that if customer’s expectations are superior to the

performance of the service, the service quality is deemed to be unsatisfactory which

results in dissonance on the part of the customer. The service will be considered excellent

if perceptions exceed expectations. Parasuraman, Berry and Zeithmal (1988) developed

an instrument, the SERVQUAL model, which was among the first models used to

measure service quality. The model is based on five factors reliability, responsiveness,

assurance, empathy and tangibles. The SERVQUAL model is built around the gap that

exists between the services offered vis-à-vis the expected service quality as perceived by

the customer.

Most writers agree that customers’ expectations are rarely concerned with a single aspect

of the service package but rather with many aspects (Berry et al., 1985). Service quality

dimensions are the characteristics which customers use to evaluate service quality. Proper

understanding of customers’ perceptions along these dimensions is essential for

hospitality organizations professionals to recognize the customer expectations. Aligning

the services to meet customer expectations would result in reduced gaps in perceptions of

service quality. Identification of the determinants of service quality should be a central

concern for service management. Once customers’ requirements are clearly identified and

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understood, hotel operators are in a better position to anticipate and fulfill their

customers’ needs and wants (Juwaheer& Ross, 2003).

1.1.2 Customer Satisfaction

In close connection with service quality is customer satisfaction. Customer satisfaction is

defined as the consumer’s fulfillment response (Oliver, 1997). It is a judgment that a

product or service feature, or the product or service itself, provided (or is providing) a

pleasurable level of consumption-related fulfillment, including levels of under- or over-

fulfillment. According to Williams et al., (2003), customers are satisfied when their

judgment of the service they have received equals or exceed what they expected. If

performance matches, the customer is satisfied and, if it exceeds expectations, even

delighted (Kotler et al., 1996). If the performances fall short of expectations, the

customer is dissatisfied. Proper understanding of the factors that influence customer

satisfaction makes it easier for the service provider to design and deliver service offers

that correspond to customer demands(Gibson, 2005).

The term service quality and customer satisfaction have been conceptualized similarly in

the literature and therefore might be considered as one evaluative construct (Iacobucci et

al; 1995). According to parasuraman et al, (1988), service quality is a global judgment

relating to the superiority of the service, whereas satisfaction is related to a specific

transaction. He concluded that the two construct are related in that incidents of

satisfaction over time results in perception of service quality and therefore the two

constructs can be measured by the same attributes.

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1.1.3 Hotel industry in Kenya

The hotels play a central role in the country’s tourism industry, yet the Coast lacks five-

star hotels. According to the Economic Survey (2012), the tourism earnings in Kenya

rose by 32.8% from 73.7 billion in 2010 to 97.9 billion in 2011. Out of these earnings,

the hotel industry’s establishments registered a net worth of over Ksh. 10 billion. The

Kenya hotel and restaurant regulations of 1988 established standards upon which

classification of hotels is based. Internationally, the classification of hotels and

restaurants creates uniformity in the industry providing common elements in every class

of hotel and restaurant that their clients should expect. The hotel business is regulated by

two Acts of parliament namely: Hotels and restaurants Act (Cap 494) and the tourist

Licensing Act (Cap 381). Vacation hotels, town hotels and lodges are classified into five

classes denoted by stars, five being the highest and one being the lowest. These star-

rated hotels enable both the domestic and international customers to understand the value

of the services they are paying for. The hotels that are 5-star rated are expected to offer

highest standards of facilities and services. According to the Kenya gazette, 13th

June,

2003, vol.cv-no.62, Nairobi has seven 5-star hotels, nine 3-star hotels, five 2-star hotels

and five 1-star hotels.

Kenya has the best developed hotel industries in Sub-Saharan Africa, offering an

average of 31,400 beds per night (Kenya economic survey 2013). As a result there has

been unprecedented entry of international Hotel brands in the Kenyan Hotel

industry. Kenya is set to host nine new international hotels which are planning to

put up 1437 hotel rooms to cater for growing demand for travel and accommodation in

the country by 2015 (Kenya economic survey 2013). These hotels include Marriot,

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Accor, Radisson blu, Park inn, Lonrho, Rezidor (2 hotels) and Hilton (2 new hotels)

Hotel occupancy in Kenya is relatively stable throughout the year, other than December

due to Christmas and New Year celebrations in December and January which reduce

demand during those months. Although the reasons for the visit to the country vary, with

leisure being a significant driver, the market shows limited seasonality pattern. Nairobi’s

main source markets are the UK, the USA and Italy. Europe is the most important region

accounting for 47% of total international arrivals in Nairobi. Arrivals from Asian markets

are also becoming increasing important especially China and India. In 2011, for example,

arrivals from China and India grew by 31% and 24% respectively. This is partly due to

large construction projects being undertaken by Chinese companies.

1.2 Statement of the Problem

For the hotel industry to achieve its objective of delivering quality service for its

customers, it is imperative to study how the hotel can conceivably meet and even exceed

customers’ service delivery expectations (Doyle, 2000). Management of organizations

seeks to know the level at which the customers are satisfied with their services and the

kind of service quality levels their customers would like in order to offer the exactly what

would be taken positively. Parasuraman et al. (1988) provided a list of five determinants

of servicequality as a result of their focus group studies with service providers

andcustomers: Reliability, Responsiveness, Assurance, Empathy and Tangibles.

In a study to evaluate service quality dimensions that impact customer satisfaction, Harr

(2008) concluded that assurance, empathy and tangibles are the most important to

customers’ evaluation of service quality and thus, may have a positive influence on

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customer satisfaction. Krishna et al., (2010) after studying service quality and its effect

on customer satisfaction in retailing in India concluded that customers have the highest

expectations on promptness of service, accuracy of transactions and security issues.

Manyi (2011) while studying the relationship between customer satisfaction and service

quality found out that all the five dimensions of service quality were significantly related

to customer satisfaction. The outcome of the study suggested that to satisfy

customers, organizations need to improve dimensions of service quality. These

results were consistent with the findings by Akoko (2012). The researcher, however,

pointed out that his research work targeted only a few service sectors due to time and

money constraint and therefore the study results could not be generalized to other

sectors such as the hotel industry.

Akoko (2012) studied service quality dimensions and customer satisfaction in Kenyan

telecommunications industry and established that all the five service quality dimensions

had positive impact on customer satisfaction. However, reliability dimension was

considered to be having the highest impact while tangibility was considered to have the

least impact. Similarly, the research work was limited to the telecommunication industry

and therefore the results could not be generalized to the hotel industry

In a study carried out by Musyoka (2013) to establish whether there exists any

relationship between service quality and library user satisfaction among universities

in Kenya, it was established that service quality accounts for 73.9% of user satisfaction.

He noted further that reliability dimension contributes most towards user satisfaction

while empathy dimension contributes the least. The research was limited to libraries

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and therefore not all inclusive and the results could not be generalized to cover the hotel

industry.

The studies by Harr (2008), Krishna et al., (2010), Manyi (2011), Akoko (2012) and

Musyoka (2013) were carried out across different technological and social-cultural

contexts. The studies also gave conflicting results in regards to service quality

dimensions impacting most on customer satisfaction. All the studies however had a

consensus that there exists a relationship between service quality and customer

satisfaction. The purpose of this study is to enhance this understanding in the Kenyan

hotel industry by answering the question: What factors affect customer satisfaction?

1.3 Research Objectives

The research question is to be answered by achieving the following specific research

objectives.

i. To determine factors influencing customer satisfaction.

ii. To examine the relationship between service quality and customer satisfaction

among hotels in Nairobi, Kenya.

1.4 Value of the Study

The study aims to identify the relationship between service quality and customer

satisfaction a case study of hotels in Nairobi, Kenya. These findings will lead to a better

understanding of operations and quality dynamics involved in the hotel industry in Kenya

and ultimately lead to customer satisfaction. The findings made from the study are

significant as they will form basis for further research. Scholars and academicians will be

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able to identify further areas for research on service quality in hotels in Kenya that will

enhance better service delivery and organizational performance. Academicians will also

make references and deductions from the findings and conclusions of the study since it

will provide additional information to the body of literature in the field of service quality

management.

The findings will also provide insights to the management of hotels in re-examining

their services strategy development particularly in the context of increasing

customer satisfaction and service loyalty. It will also provide an insight on the areas that

need improvement, restructuring or general overhaul of the strategies used in service

delivery and organizational performance.

The tourism industry in Kenya is currently facing slow progress and the hotels are losing

a lot of revenue due to cancelled bookings. This study is important to policy makers both

in the private and public sector of the industry since they stand to gain significant insights

from the findings of this study.The information at their disposal on service quality and

customer satisfaction will enable them formulate policies that relate to the hotel industry

in Kenya.

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CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This chapter discusses the theoretical framework and empirical studies related to service

quality and customer satisfaction. In particular, the study covers literature related to the

study as studied by other scholars. The literature is reviewed in two streams. First,

literature on service quality and its measurement is reviewed. Then, literature relating to

customer satisfaction is reviewed. Finally, literature relating to the relationship between

service quality and customer satisfaction is reviewed and a conceptual framework of the

study developed.

2.2 Service Quality

Researchers proposed different views on the definitions of service quality. Service quality

is defined as a comparative function between consumer expectations and actual

service performance (Parasuraman et al., 1985). On the other hand, Parasuraman et al.,

(1988) defined service quality as the ability of an organization to meet or exceed

customer expectations. According to Cronin & Taylor (1994), service quality is a form of

attitude representing a long-run overall evaluation of service. As observed by Chang,

Chen and Hsu (2002), the traditional notion of service quality by Parasuraman et al.,

(1985) is most commonly accepted.

2.3 Determinants of Service Quality

When purchasing goods, the customer employs many tangible aspects to judge quality;

style, hardness, color, label, feel and package. However, when purchasing services fewer

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tangible aspects exist. In the absence of tangible evidence on which to evaluate quality,

customers must depend on other aspects. Service quality dimensions are the

aspects/characteristics which customers use to evaluate service quality.

A research by Parasuraman et al., (1985) identifies ten determinants that influence

customers’ perceptions of service quality as reliability, responsiveness, tangibility,

communication, credibility, security, competence, courtesy, understanding and access.

The description of the ten determinants of service quality is given in Table 2.1.

Table 2.1: Ten dimensions of service quality

Dimension Description

Tangibility Physical evidence of service (facilities, tools, equipments

Responsiveness Willingness or readiness to provide service, timeliness

Reliability Getting it right first time, honoring promises, dependability.

Communication Keeping customers informed in a language that they can understand

Credibility Honest, trustworthiness, having customer’s best interest at heart

Security Physical and financial; confidentiality

Competence Possession of the skills and knowledge required to perform the

service

Courtesy Politeness, respect, friendliness, clean and neat appearance.

Understanding Knowing the customer, his needs and requirements.

Access Ease of approach and contact

Source: Adapted from Parasuraman, Zeithml and Berry (1985)

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In a follow-up study, Berry et al., (1988) found a high degree of correlation between, on

the one hand, communication, competence, courtesy, credibility and security, and, on the

other, between access and understanding; and so they created the two broad dimensions

of assurance and empathy, that is, five consolidated dimensions:-reliability,

responsiveness, tangibles, assurance and empathy (Parasuraman et al., 1988). These

dimensions were then used as a basis for the development of a service quality

measurement instrument; SERVQUAL model (Zeithamlet al., 1988). Table 2.2

demonstrates the five service dimensions customers care about.

Table 2.2: Five dimensions of service quality

Dimension Description

Tangibles Physical facilities, equipment and appearance of personnel.

Reliability Ability to perform the promised service dependably and accurately

Responsiveness Willingness to help customers and provide prompt service

Assurance Knowledge and courtesy of employees and their ability to inspire trust and

confidence

Empathy Caring, individualized attention the firm provides its customers.

Source: Adapted from Parasuraman, Zeithml and Berry (1988)

Johnston et al., (1990) tested the comprehensiveness of Parasuraman et al’s (1985)

service quality determinants using management perceptions of service and suggested a

refined list of 12 determinants of service quality as access, appearance/aesthetics,

availability, cleanliness/tidiness, comfort, communication, competence, courtesy,

friendliness, reliability, responsiveness and security. The limitation of their work lay in

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the fact that the empirical investigation drew only on management perception of service

quality unlike Parasuraman et al., (1988) who used customer data in order to identify the

determinants of service quality.

Johnston and Silvestro (1990) included the customer’s perspective to the 12 service

quality dimensions and identified 5 additional dimension to create 17 dimensions

asaccess, appearance/aesthetics, availability, cleanliness/tidiness, comfort,

communication, competence, courtesy, friendliness, reliability, responsiveness,

securitycare, commitment, attentiveness/helpfulness, functionality and integrity (Johnston

et al.,1990). These dimensions are described in details in appendix 1.

Gronroos (1990) identified three dimensions of service quality as technical quality of the

service (“what” service is provided), which can be assessed by the customer like the

technical dimensions of a product, functional quality which represent how the service is

provided and the image of the service provider which moderates both technical and

functional quality to arrive at a perceived level of service. He argued that functional

quality is an important dimension of perceived service than technical quality because

service quality lies in improving the functional quality of a firm’s service process by

managing the staff-customer interaction and transactional relationships. He observed that

a favorable image is an asset for any firm because it has an impact on customer

perception of the operation of the firm.

These authors and many others who have postulated service quality dimensions appear to

have based their work on Parasuraman et al., (1985) and Parasuraman et al., (1988) well

publicized work. For the purpose of this study, therefore, the researcher adopted

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Parasuraman et al’s (1988) dimensions of service quality i.e. Reliability, Responsiveness,

Access, Empathy and Tangibles. The five dimensions of service quality developed by

Parasuraman, Zeithmal and Berry (1988) are the most acknowledged and applied in

diversity of service industries (Nathan.D. and Saghier.N. (2013).

2.4 Measurement of Service Quality

Measuring service quality is an important aspect in the quality improvement process

because it provides feedback about the type of service provided and the extent to which it

meets customers’ needs (Mwangi et al., 2009). A number of scholars have carried out

several studies with an aim of developing models of measurement that would help service

organizations determine the extent to which their services are effective.

2.4.1 Models for specific service settings

Different researchers have developed alternative measures of service quality for specific

service settings. Knutson et al., (1991) developed LODGSERV model to measure service

quality in the lodging industry. The model is based on the five original SERVQUAL

dimensions and contains 26 items. Getty and Thompson (1994) on the other hand

developed LODGEQUAL model to measure service quality in the hotel industry. The

model identified three dimensions, namely tangibles, reliability and contact. DINESERV

model was developed by Stevens, Knutson and Patton (1995) to measure service quality

in restaurants. It contains 29 items and five SERVQUAL dimensions. Another model,

DIVEPERF, was developed by O’Neill et al., (2010) to assess perceptions of diving

services. The model consists of five SERVQUAL dimensions and 27 items. All of these

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models represent modifications of the SERVQUAL instrument, aiming to improve its

original methodology.

2.4.2 The SERVQUAL Model

The model was developed by Parasuraman, Zeithaml and Berry (1988) as a tool of

identifying service quality shortfall. This model is based on the premise that customers

can evaluate a firm’s service quality by comparing their perception of its service with

their own expectations.

The model measures customer expectations and perceptions of service quality. The

quality gap (Q) is calculated by subtracting the expectation (E) from the perception (P)

value i.e. P-E=Q. Summation of all the Q values provide an overall quality rating which

is an indicator of relative importance of the service quality dimensions that influence

customers’ overall quality perceptions. SERVQUAL is a standardized instrument that has

been applied across a broad spectrum of service industries.

The SERVQUAL scale (Questionnaire) has two sections: one to measure customer

expectations in relation to a service segment and the other to measure perception

regarding the organization whose service is being assessed. SERVQUAL comprises a 22

items (Likert-type) with five dimensions of reliability, responsiveness, assurance,

empathy and tangibles. From the 5 dimensions, 22 statements are derived, each

measuring both the expectations and perceptions of customers towards the quality of

services of the organization being assessed. The customers are required to rate, on a 5-

point Likert scale, the degree to which they feel the service provider should deliver for an

excellent service. Another identical scale is provided adjacent to the first one in which the

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respondents rate the actual quality of service delivered to them by an organization based

on their perceptions. For each statement, the difference between perception and

expectation is calculated; the averages of the obtained score being the SERVQUAL score

(Parasuraman et al., 1988).

2.4.3 Performance Only Model (SERVPERF)

SERVPERF was developed by Cronin and Taylor (1992) in their empirical work which

involved the modification of SERVQUAL with respect to conceptualization and

measurement of service quality. They developed a performance based measure of service

quality called “SERVPERF” illustrating that service quality is a form of consumer

attitude. SERVPERF measures service quality based solely on performance. Cronin and

Taylor (1992) argued that performance is the measure that best explains customers’

perceptions of service quality, so expectations should not be included in the service

quality measurement instrument. SERVPERF looks at the attributes of the 5 dimensions,

worded the same as SERVQUAL but does not repeat the set of statements as expectation

items. SERVPERFtherefore comprises a 22 items (Likert-type) with five dimensions of

reliability, responsiveness, assurance, empathy and tangibles. 22 statements are then

derived to measure the perceptions of customers towards the quality of services of the

organization being assessed.

This research adapted the SERVPERF tool to measure service quality among hotels in

Nairobi Kenya.

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2.5 Empirical Studies on Service Quality

Different models have been advanced concerning service quality in the service

organizations with an aim of establishing the relationship between service quality and

customer satisfaction. From the earlier research work, Parasuraman et al., (1988), five

determinants of service quality were identified as reliability, responsiveness, assurance

empathy and tangibles. Ten studies carried out using the Servqual questionnaire revealed

that Reliability is the most critical dimension when measuring the relative importance of

the five dimensions followed by Responsiveness, Assurance, Empathy and finally

Tangibles (Parasuraman et al., 1991)

Stromgren(2007) studied the factors influencing service quality in the hotel industry in Peru

and established that the customers were more interested on the dimensions of reliability

exterior, tangibles and assurance. The best predictor of overall service quality was

identified as the dimension of reliability. The researcher however noted that a different

context would give different results. This is due to different social demographic variables

such as culture and religion which might impact on customer expectations. Harr (2008)

on the other handstudied service dimensions that leads to higher levels of customer

satisfaction in restaurants in Singapore and found out that assurance, empathy and tangibles

are the most important to customers’ evaluation of service quality, and thus, may have a

positive influence on customer satisfaction.

Musili (2009) studied the perceived quality of passenger services provided by the rift

valley railway consortium and found out that courtesy and friendliness of staff, security

and driving expertise are the most important dimensions to the customers. He further

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noted that the general performance was poor with 37.5% of respondents registering

disappointment with the service.

A study by Krishna et al., (2010), established that customers have the highest

expectations on promptness of service, accuracy of transactions and security issues. The

researcher advised managers to prioritize on attention to details and promptness in

addressing customer complaints. The researcher noted that customers’ expectations and

perceptions are subjective and the findings can only be generalized to a pre-defined

market and economic scenarios.

Kiange (2011) investigated managers’ perception of customer expectations in hotel

industry in Kenya. The results showed that assurance, empathy and tangibles were

regarded as the most important factors affecting service quality. This research was

however limited to managers’ perception of customer expectations and failed to take into

account customer’s expectations. The result of the study therefore, does not represent the

voice of the customer. More study therefore needs to be carried out to establish whether

the manager’s perception of customer expectations matches customers’ expectations.

Kangogo et al., (2013) studied effect of customer satisfaction on performance of the hotel

industry in the western tourism circuit of Kenya. The customers reported to be satisfied

with reservation, reception, food quality and beverage quality. Costs, security and hotel

amenities on the other hand registered fair ratings while provision of personalized

services registered dissatisfaction. The researcher also noted that customer satisfaction

has positive impacts on market share, service quality, hotel image, sales turnover, and

that lack of customer satisfaction results in customer and employee turnover.

19

2.6 Customer Satisfaction

Tse&Wilton, (1988) defined customer satisfaction as “the consumer’sresponse to the

evaluation of the perceived discrepancy between prior expectations andthe actual

performance of the product or service as perceived after its consumption”. Woodruff and

Gardial, (1999)defined customer satisfaction as “the evaluative reaction to how particular

productperformed when compared to how he or she anticipated that it would perform”.

Kotler et al., (2002) on the other hand defined Customer satisfaction as the extent to

which a product’s perceived performance matches a buyer’s expectations. Failure to meet

theseexpectations leads to dissatisfaction. These definitions consider satisfaction as an

overall post-purchase evaluation by the customer.

2.6.1 Factors affecting Customer Satisfaction

According to Valerie, Zeithaml and Bitner (2005), customer satisfaction is influenced by

a host of issues such as product and service features, customer emotions, perception of

equity and fairness and other customers, family members, friends and co-workers.

According to Tulel et al, 2006, the customer service a brand offers and the fairness of the

price it charges determines the level of satisfaction among its customers than any other

measures. Parasuraman, Zeithml and Berry, 1988 identified 22 factors that influences

customer satisfaction as Physical facilities, Equipment, Appearance of hotel employees,

Communication materials, Timeliness of service, Problem solving interest, Efficient

service, Consistency of service, Accuracy of records, Problem resolution time, Prompt

attention to guest’s requests, Willingness to help, Flexibility of employees, Behavior of

employees, Safety and security, Courtesy of employees, Competence of employees,

20

Individualized attention, Convenient operating hours, Personal attention from employees,

Concern towards guest interest and Understanding guest specific needs.

2.6.2 Empirical Studies on Customer Satisfaction

Lawrence C. Voss (2006) studied customer satisfaction among four star hotels in

Spain,Germany and England. The results revealed that many customers were satisfied

with theability of staff to speak a foreign language, friendliness of staff, condition of

premise, room comfort and the ease of obtaining information. Areas of dissatisfaction

includedrespect shown by staff, ease of contacting a staff member, extra personal

attention,multilingual magazines, international newspaper and TV programs in own

language. Onoverall, customer satisfaction was high in all the hotels.

Mbungwana Christine Lungiswa (2009) conducted a customer satisfaction survey in

hotels in Cape Town. The research identified areas of satisfaction as, wellness/spa

experience, guest entertainment, maintenance of grounds and swimming pool experience.

Areas of dissatisfaction were identified as delivery of luggage, switch board and message

service, attention to special requests and dinner experience.

Kangogo et al., (2013) studied effect of customer satisfaction on performance of the hotel

industry in the western tourism circuit of Kenya. The customers reported to be satisfied

with reservation, reception, food quality and beverage quality. Costs, security and hotel

amenities on the other hand registered fair ratings while provision of personalized

services registered dissatisfaction. The researcher also noted that customer satisfaction

has positive impacts on market share, service quality, hotel image, sales turnover, and

that lack of customer satisfaction results in customer and employee turnover.

21

Similarly, Mburu et al., (2013) studied the determinants of customer satisfaction in the

Kenyan banking industry. The customers reported to be satisfied with the accuracy and

timeliness of bank statements and staff understanding of customer needs. Entertainment

& refreshment to customers, adequacy of bank’s networks and readiness of bank staff to

respond to customer requests registered elements of dissatisfaction. He further noted that

customer satisfaction can lead to higher rates of retention of the Kenyan bank customers.

2.7 Relationship between Service Quality and Customer Satisfaction

Some researchers argue that service quality is an antecedent of customer satisfaction

(Churchill and Suprenant, 1982) while others argues that satisfaction represents an

antecedent of service quality (Carman, 1990; Boltonand Drew, 1991). However, the

majority of recent publications believe that service quality is an antecedent to customer

satisfaction (Carrillat et al., 2007 &Zeithaml et al., 2008).

It is generally accepted that a positive relationship exists between service quality and

customer satisfaction (Bei and Chiao, 2001). Rowley (1998) argues that service quality

isan attitude related to, but not the same, as satisfaction. Parasuraman et al., (1985) in

theirstudy, proposed that when perceived service quality is high, then it will lead to

increase in customer satisfaction. Similar conclusion was reached by Bei and Chiao

(2006) and Brady et al., (2005).

After conducting a study to establish the relationship between customer satisfaction

andservice quality, Janet (2011) concluded that a significant relationship between the

twoexisted. All the dimensions of service quality were identified as the key factors in

influencing customer satisfaction. The outcome of the study suggested that to

22

improvecustomer satisfaction, organizations need to improve the dimensions of service

quality.

Akoko (2012) studied service quality dimensions and customer satisfaction in

Kenyantelecommunications industry and established that all the five service quality

dimensionshad positive impact on customer satisfaction. However, reliability dimension

was considered to be having the highest impact while tangibility was considered to have

the least impact. He suggested that all service quality dimensions should be improved and

allocated more resources since they positively affect customer satisfaction.

In a study carried out by Musyoka (2013) to establish whether there exists any

relationship between service quality and library user satisfaction among universities in

Kenya, it was established that service quality accounts for 73.9% of user satisfaction. He

noted further that reliability dimension contributes most towards user satisfaction while

empathy dimension contributes the least.

2.8 Summary of Literature Review

A review of literature on service quality indicates that the relative importance of the

dimensions of service quality is dependent on the industry in which service quality is

being measured. The review also highlights the need to examine the extent to which the

services provided meets customers’ needs. In the hotel industry, a review of the existing

literature has shown that customer satisfaction is highly depended on service quality

(Janet (2011), Harr (2008) & Krishna et al., (2010).

23

2.9 Conceptual Framework

Based on the literature reviewed, a theoretical framework for this study was developed

and is shown in Figure 2.1, the major objective of the study being to analyze the

relationship between service quality and customer satisfaction.

Figure 2.1: Service quality and customer satisfaction relationship framework.

Source: Adapted from Jalal (2012)

The dependent variable in this research is overall customer satisfaction while the

independent variable is service quality which measures the level of customer satisfaction.

The type of customer will act as a moderating variable in the conceptual framework. The

dimensions included in this variable are reliability, responsiveness, assurance, empathy

and tangibility.

Reliability

Independent variable Dependent variable

Reliability (X2)

Responsiveness

(X3)

Assurance (X4)

Empathy (X5)

Customer

satisfaction

Tangible (X1)

Independent variable> Dependent variable

β1

β2

β3

β4

β5

24

The mathematical expression for the regression model represented by this conceptual

framework is given as follows:

Y = β0 + β1X1+ β2X2 + β3X3 + β4X4 + β5X5 + ε

or

User satisfaction = β0 + β1*Tangibles + β2*Reliability + β3*Responsiveness +

β4*Assurance + β5*Empathy + є

Where, Y is the dependent variable representing Customer Satisfaction whereas X1, X2,

X3, X4 and X5 are the independent variables, that is, Tangibles, Reliability,

Responsiveness, Assurance and Empathy respectively. β0 is a constant (the intercept of

the model) and βis are regression coefficients of Xi which indicates the amount of

change in Y given a unit change in Xi variables while є is the error term.

25

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Introduction

This chapter sets out various stages that were followed in completing the study. These

stages are research design, target population, sampling design, data collection

instruments, data collection procedures and data analysis.

3.2 Research Design

The researcher applied a descriptive design to study service quality and customer

satisfaction from the customer’s perspective in star rated hotels within Nairobi. The

research design was chosen because the study was not confined to the collection and

description of the data, but sought to determine the existence of certain relationships

among the research variables. In this study, it was used to establish the relationship

between the determinants of service quality and customer satisfaction among star rated

hotels in Nairobi Kenya. The studies by Stromgren (2007), Krishna et al., (2010), Janet

(2011), Musyoka (2013), Mburu et al., 2013 adopted this research design and specific

research objectives were sufficiently achieved.

3.3 Target Population

In this study, the population that was targeted comprised the guests of star rated hotels in

Nairobi Kenya.According to the Kenya gazette, 13th

June, 2003, vol.cv-no.62, Nairobi

has seven 5-star hotels, nine 3-star hotels, five 2-star hotels and five 1-star hotels with a

total bed capacity of 6200 beds as indicated on See appendix 3. According to a research

26

carried out by Muna et al., (2013), Nairobi hotels are expected to have an average

occupancy rate of 55% in year 2014. See appendix: 3. In this regard the projected number

of guests per day is 3412 guests.

3.4 Sample size

This study adapted the formula developed by Glenn (2009) to determine the sample size.

Sample size, n = N/ (1+N(e)2)

Where e = Margin of error (0.05) and N is the population (3412)

Therefore;

Sample, n = N/ (1+N(e)2) = 3412/ (1+3412(0.05)

2) = 358 respondents

A minimum of 358 questionnaires were thereforedistributed proportionately among the

respondents from the star rated hotels in Nairobi as indicated in appendix 3.

3.5 Data Collection

Primary data was used for this study. The data was collected using a standardized

questionnaire comprising of 22 statements derived from the works of Cronin and Taylor

(1992) which involved the modification of SERVQUAL. The questionnaire was modified

to include a section that was used to measure factors influencing customer

satisfaction.The questionnaire comprised three parts. The first part required the

respondents to give their demographic information. The aim of this part was to provide

information on the type of the customer. The second part required them to rate the extent

to which they believed the indicated factors influences customer satisfaction. Part three of

the questionnaire required the respondents to rate their perception levels with the services

27

provided by the hotels. Likert type scale ranging from 1 to 5 was adapted. The researcher

administered a questionnaire to each member of the sample population using a drop and

pick later method.

3.6 Data Analysis

Prior to processing the responses, the completed questionnaires were edited for

completeness and consistency. Quantitative data collected was then analyzed and

interpreted in line with the study objectives through use of statistical package for social

sciences (SPSS).

The first research question was answered using the data collected from part II of the

questionnaire. The mean (weighted average) and standard deviation were used to analyze

the data from the responses received. Linear Regression model was used to realize the

second objective. The mathematical expression for the regression model is given as

follows:

Y = α + β1X1+ β2X2 + β3X3 + β4X4 + β5X5 + ε

Where, Y is the dependent variable representing Customer Satisfaction and X1, X2, X3,

X4 and X5 are the independent variables representing the 5 service quality dimensions,

that is, Tangibles, Reliability, Responsiveness, Assurance and Empathy respectively. α is

a constant (the intercept of the model) and βis are regression coefficients of Xis variables

while ε is the error term.

28

CHAPTER FOUR

DATA ANALYSIS, RESULTS AND DISCUSSION

4.1 Introduction

This chapter presents the results obtained from data analysis, interpretations and

discussion of findings. The study results are analyzed and interpreted in line with the

objectives which were to determine factors that influence customer satisfaction ant to

examine the relationship between service quality and customer satisfaction among hotels

in Nairobi, Kenya.

4.2 Results

The study targeted the guests of selected rated hotels in Nairobi County. The respondents

in the rated hotels were of different nationalities across the globe. Due to ample time and

accessibility of the hotels the survey yielded a 100% response rate in the research

process. The questionnaires were examined for errors and omissions then used for

analysis.

4.2.1 Respondents general information

The study sought to find out the distribution of respondents in five categories named;

gender, nationality, age, purpose of visit and the number of visits to the hotel. The results

are highlighted in Table 4.1.

29

Table 4.1: profile of respondents

Gender Percentage

Male 47%

Female 53%

Nationality Percentage

Kenya 28%

Rest of Africa 20%

Europe 15%

USA 11%

Middle East 8%

Asia 11%

Others 7%

Age Percentage

18 – 25 7%

26 – 35 22%

36 – 45 31%

46 – 55 34%

Over 55 years 6%

Purpose of the visit

Airline crew 14%

Leisure 27%

Business 25%

Meeting 17%

Others 17%

Number of visits to hotel

First Visit 14%

2 – 5 53%

6 – 10 23%

10> 10%

Source: Research data (2014)

30

From the above table the respondents’ general information was as follows: females

accounted for 53% of all the respondents while males were 47%. The study sought to

find out the nationality of the respondents; Kenyan respondents constituted the highest

percentage of the respondents at 28% while respondents from other destinations in

Africa constituted 20%. Respondents from Europe constituted 15% and American

respondents constituted 11%. Respondents from Middle East constituted 8% while

respondents from Asia and other destinations constituted 11% and 7% respectively.

The study further sought to find out the age distribution of respondents and the findings

were reported as follows: 18 – 25 age bracket constituted 7%, 26 – 35 age bracket

constituted 22%, 36 – 45 age bracket constituted 31%, 46 – 55 age bracket constituted

34% and lastly age bracket rated as over 55 years received a mere 6%.

The study also captured the purpose of visit and the findings were as follows; 14% of the

respondents were part of the airline crew, 27% of respondents were in the country for

leisure while another 25% of respondents were in Nairobi for business related issues.

Finally meetings and other purposes both constituted 17% each. Finally the number of

visits the respondents had visited the rated establishments and the results were as follows;

first time visitors constituted 14%, respondents who had visited the establishment

between 2 – 5 times constituted a large 53%, respondents who have visited the

establishments 6 -10 times constituted 23% while those who visited more than 10 times

constituted 10%.

31

4.2.2 Reliability of the results

Mitchell (1996) outlines three common approaches to assessing reliability in addition to

comparing the data collected with other data from other sources. They are test re-test;

internal consistency and alternative form. In our study the method adopted was the test

re-tests method. the test re-test estimates of reliability were obtained by correlating data

collected with those from the same questionnaire collected under as near equivalent

conditions as possible. The questionnaire was pretested twice to respondents in the rated

hotels.

4.3 Perception of factors influencing customer satisfaction

The first objective sought to find out factors influencing customer satisfaction.

Respondents were asked to rate the factors on a scale of 1 to 5 ranging as 1 = strongly

disagree, 2 = disagree, 3= neutral, 4 = agree and 5= strongly agree. A five point likert

scale was used to interpret the respondent’s responses.

According to the scale those factors which were not considered at all were awarded 1

while those which were extremely influencing satisfaction were awarded 5 within the

continuum are 4 for fairly influencing satisfaction, 3 for neutral and 2 for somewhat

influencing satisfaction.

The mean (weighted average) and standard deviation were used to analyze the data from

the responses received as shown in Table 4.2.

32

Table 4.2 Factors influencing customer satisfaction.

No Factor N Mean Std deviation

1 communication materials 358 4.21 0.717

Fai

rly i

nfl

uen

cing s

atis

fact

ion

.

2 Timeliness 358 4.09 0.716

3 Willingness to help 358 4.02 0.812

4 Equipment 358 4.01 0.728

5 Understanding guest specific

needs

358 3.99 0.712

6 Physical facilities 358 3.98 0.721

7 Problem solving interest 358 3.98 0.871

8 Employee appearance 358 3.89 0.827

9 Accuracy of records 358 3. 82 0.672

10 Problem resolution time 358 3.78 0.712

11 Prompt attention to request 358 3.77 0.722

12 Flexibility of employees 358 3.77 0.672

13 Concern towards guests interests 358 3.77 0.672

14 Assurance ,safety and security 358 3.72 0.777

15 Individualized attention 358 3.72 0.621

16 Convenient operating hours 358 3.72 0.716

17 Personal attention from employees 358 3.62 0.711

18 courtesy of employees 358 3.61 0.726

19 Consistency of service 358 3.28 0.726

Neu

tral

20 Competence of employees 358 3.22 0.726

21 Efficient services 358 2.89 0.917

22 Behaviour of employees 358 2.87 0.716

Source: Research data (2014)

According to the researcher, those factors with a mean between 0.5 and 1.5 were not

influencing customer satisfaction, those factors with a mean greater than 1.6 but less than

33

2.5 were somewhat influencing customer satisfaction. From the respondents’ summary in

table 4.2 above, there was no score between 0.5 and 1.5 therefore all the factors

mentioned above influenced customer satisfaction fair extent. The factors with a mean

greater than 2.6 but less than 3.5 were neutral and they include, efficient services

(M=2.89),Consistency of service (M=3.28), Behavior of employees (M=2.87) and lastly

competence of employees (M=3.22).

The factors with a mean greater than 3.6 but less than 4.5 were fairly influencing

satisfaction. The factors that were found to be fairly satisfaction were,physical facilities

(M=3.98), equipment (M=4.01), employee appearance (M=3.89), communication

material(M=4.21), timeliness(M=4.09), Problem solving interest (M=3.98), Accuracy of

records (M=3.82), Problem resolution time (M=3.78), Prompt attention to request

(M=3.77), willingness to help (M=4.02), flexibility of employees (M=3.77) ,safety and

security (M=3.72), courtesy of employees (M=3.61), individualized attention (M=3.72),

convenient operating hours (M=3.72) ,personal attention from employees(M=3.62), and

lastly concern towards guests (M=3.77).

The factors with a mean greater than 4.6 would be termed as extremely influencing

customer satisfaction. There was no mean score greater than 4.6 hence it can be

extrapolated that none of the factors listed above were perceived to be extremely

influencing customer satisfaction.

The standard deviation was also used to analyze the responses. The higher the standard

deviation, the higher the level of dispersion among the respondents. The standard

deviation for all the factors listed was less than 1 meaning there was general consensus

34

by the respondents. A standard deviation of more than one would mean there was no

consensus among the respondents.

4.4 Relationship between Service Quality and Customer Satisfaction

The second objective of this study sought to examine the relationship between service

quality and customer satisfaction among hotels in Nairobi, Kenya. The following linear

regression model was adapted by the researcher to help determine the nature of the

relationship: y = 0 + 1XI + 2X2 + 3X3+ 4 X4 + 5X5 + : where y is the

dependent variable ( customer satisfaction), 0 is the constant (intercept), is are the

regression coefficients and x1,x2,x3,x4,x5 are tangibles, reliabilities, responsiveness,

assurance and empathy.

4.4.1 T Test for regression coefficients

Table 4.3: Regression coefficients of the five dimensions of service quality

Coefficients Std Error T-Stat P-value Lower 95 Upper 95

Intercept 6.3226 0.05 90.362 0.000 5.886 6.236

Tangibles x1 0.867 0.06 3.621 0.026 0.061 0.001

Reliability x2 0.916 0.05 2.601 0.362 0.521 0.026

Responsivenessx 3 0.865 0.08 4.261 0.891 0.143 0.013

Assurance x 4 0.813 0.04 4.193 0.026 0.261 0.124

Empathy x5 0.879 0.053 0.023 0.041 0.141 0.613

Source: Research data (2014)

From the research findings, the following values were obtained; 0 =6.322, 1=0.867,

2=0.916, 3=0.865, 4=0.813, 5=0.879.

The regression model can therefore be expressed as follows:

Y = 6.322 + 0.867XI + 0.916X2 + 0.865X3+ 0.813X4 + 0.879X5 +

35

Therefore:

Customer satisfaction = 6.322 + 0.867 Tangibles + 0.916 Reliability + 0.865

Responsiveness+ 0.813 Assurance + 0.879Empathy +

At 5% level of significance, three variables i.e. Tangibles, Assurance and Empathy were

statistically significance since their p-values were below the acceptable threshold of 0.05.

However, Reliability and Responsiveness were statistically insignificant since their p

values were above the acceptable threshold.

From the research findings, positive effect was found on all the dimensions of service

quality i.e. tangibles, reliability, responsiveness, assurance and empathy with regression

coefficients of 0.867, 0.916, 0.865, 0.813 and 0.879 respectively. These findings suggests

that a unit increase in tangible dimension, taking all the other variables constant at zero

would result to a 0.867 increase in customer satisfaction. Similarly, a unit increase in

reliability would result to a 0.916 increase in customer satisfaction. A unit increase in

responsiveness would result to a 0.865 increase in customer satisfaction.A unit increase

in assurance would result to a 0.813 increase in customer satisfaction. Finally, a unit

increase in Empathy would result to a 0.879 increase in customer satisfaction. These

findings also suggest that taking all variables constant at zero, the effect to customer

satisfaction would be 6.322.

These findings further indicate that reliability contributes most towards customer

satisfaction followed by Empathy, Tangibles and Responsiveness. Assurance was seen to

contribute the least. However, all the dimensions were highly rated by the respondents

and therefore the service industry cannot ignore any of the dimensions as they influence

customer satisfaction though at different levels.

36

4.4.2 Coefficient of Determination, R2

The coefficient of determination is a number that indicates how well data fit a statistical

model. It is a measure of how well observed outcomes are replicated by the model. From

the analysis, the five dimensions of service quality contribute 74.2% towards customer

satisfaction as represented by the coefficient of determination (R2). Other factors

contribute 25.8% towards customer satisfaction. Table 4.5 shows the regression results.

Table 4.4: Regression statistics

Multiple R 0.86153726 R Square(R2) 0.74224645 Adjusted R square 0.731245143 Standard error 0.243548651 observations 358

Research data (2014)

4.4.3 F Test for the Full Model

Analysis of variance (ANOVA) is a statistical model used to compare two or more

variables for statistical significance. In this study, ANOVA was used to establish whether

there exist a significance relationship between service quality (Independent variable) and

customer satisfaction (Dependent variable). From the analysis, significance F=0.000,

which is less than p=0.05 and therefore the model is statistically significant. This implies

that the model can be used for prediction purposes.

37

Table 4.5: Test for significance

ANOVA df SS MS F significance F

Regression 5 61.2368547 16.36256 59.68913 0.000 Residual 327 27.6587253 0.38732

Total 358 72.356212

Source: Research data (2014)

4.5: Discussions

This study has examined the factors influencing customer satisfaction among guests of

hotels in Nairobi, Kenya. From the analysis, 17 factors which fairly influence customer

satisfaction were identified as the status of hotel’s physical facilities, status of hotel’s

equipment, employee appearance, communication material, timeliness, Problem solving

interest, Accuracy of records, Problem resolution time, Prompt attention to request,

willingness to help, flexibility of employees, Assurance of safety and security, courtesy

of employees, individualized attention, convenient operating hours, personal attention

from employees, and lastly concern towards guests.

The results of the regression analysis indicate that reliability contributes most towards

customer satisfaction followed by Empathy, Tangibles and Responsiveness. Assurance

was seen to contribute the least. However, all the dimensions were highly rated by the

respondents and therefore the service industry cannot ignore any of the dimensions as

they influence customer satisfaction though at different levels. Reliability dimension

constitutes error free records, timeliness of service delivery, sincere interest in solving

guest’s problems and the efficiency of the service.

38

The results obtained were also statistically significant since the p-value for Tangibles,

Assurance and Empathy was <0.05. However, reliability and responsiveness registered a

p-value >0.05 and therefore were considered to be statistically insignificant. The results

of this study are consistent with the findings of Stromgren (2007), Musyoka (2013) and

Akoko (2012) who found out that reliability dimension has the highest impact on

customer satisfaction.

39

CHAPTER FIVE: SUMMARY, CONCLUSION AND

RECOMMENDATIONS

5.1 Introduction

This chapter is the synthesis of the entire study and presents a summary of findings,

conclusions drawn therefore and recommendations.

5.2 Summary of Findings

The study set out to examinefactors influencing customer satisfaction and the relationship

between service quality and customer satisfaction in rated hotels in Nairobi, Kenya.Data

was collected through a structured questionnaire which was issued to each respondent.

All the 358 questionnaires issued to the respondents were returned back resulting to a

100% response rate. From the analysis, the following findings were arrived at.

The results from the study show that there are 17 factors which fairly influence customer

satisfaction. These were the factors with a mean greater than 3.6 but less than 4.5 and

included,status of hotel’s physical facilities, status of hotel’s equipment, employee

appearance, communication material, timeliness, Problem solving interest, Accuracy of

records, Problem resolution time, Prompt attention to request, willingness to help,

flexibility of employees, Assurance of safety and security, courtesy of employees,

individualized attention, convenient operating hours, personal attention from employees,

and lastly concern towards guests.

The results further indicated that the status of communication materials, timeliness of

service, the willingness of the hotel employees to help guests, the status of hotel

40

equipment and understanding of guests specific needs were the top five factors in

influencing customer satisfaction. The factors with a mean greater than 4.6 would be

termed as extremely influencing customer satisfaction. However, there was no factor with

a mean greater than 4.6. Therefore, none of the factors listed above were perceived to be

extremely influencing customer satisfaction.These results therefore suggest that there

could be other factors that extremely influence customer satisfaction other than the 22

factors used in this study. Future studies should therefore explore the existence of these

factors.

Of the five dimensions of service quality used for the study, three were found to be

statistically significant with p-values of less than 0.05. These wereTangibles, Assurance

and Empathy. Reliability and Responsiveness were found to be statistically insignificant

since they had p-values greater than 0.05. The result of the regression analysis established

that all the five dimensions had a positive effect on customer satisfaction though at

varying degree. Reliability was found to have the greatest impact on customer

satisfaction followed by Empathy, Tangibles and Responsiveness. Assurance was seen to

contribute the least. All the five dimensions were highly rated by the respondents. This

means that service quality is strongly linked with customer satisfaction and the higher the

service quality, the higher the customer satisfaction. The results of this study are

consistent with the findings of Stromgren (2007), Musyoka (2013) and Akoko (2012)

who found out that reliability dimension has the highest impact on customer satisfaction.

41

5.3 Conclusion

This study set out to determine the factors influencing customer satisfaction and the

relationship between service quality and customer satisfaction. From the above findings,

17 factors fairly influencing customer satisfaction were identified. Of these factors, the

top five factors were identified as communication material, timeliness of service,

willingness to help, status of hotel equipment, Problem solving interest and status of

physical facilities. This implies that the hotels can improve the level of customer

satisfaction by committing more resources towards improving the factors with the highest

impact.

The results also show that the service quality dimensions have different impact in

influencing customer satisfaction. Reliability dimension was found to have the highest

impact followed by Empathy and Tangible. Responsiveness and Assurance were seen to

influence customer satisfaction the least. However, all the five dimensions were highly

rated and it was concluded that the rated Hotels offers high quality of services in all the

five major areas.

5.4. Recommendations

This study recommends that the 17 factors fairly influencing customer satisfaction should

be enhanced by all the hotels in Nairobi in order to increase guest’s satisfaction with their

services. The hotels should also enhance the five dimensions of service quality due to

their positive impact on customer satisfaction. When allocating resources, reliability

dimension should be given more allocation since it has the highest impact on customer

42

satisfaction. Similarly, the status of communication materials should also be emphasized

since it’s the main factor influencing customer satisfaction

5.5. Limitations of the study and suggestions for Further Research

The study had the following limitations. First, the study was conducted in Nairobi city

only hence its findings might not be generalized to all hotelsin Kenya. Thus future studies

should consider examining the same variables using morehotels that cuts across the

various major categorizations in terms of clients served, size and location. Second, the

study did not attempt to compare the views of the customers and those of employees in

terms of service quality. Thus future studies should try to check whether there is any gap

in ratings of customers and employees so that internal management can adjust their

strategies to remedy any gaps. Finally, the study did not find any factor extremely

influencing customer satisfaction. Thus future studies should try to check whether there

exist other factors which could extremely influence customer satisfaction.

43

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telecommunications service industry: A case of Nokia Siemens Networks.

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APPENDICES

Appendix 1: Definitions of the 18 determinants of service quality.

Determinant Description

Access The physical approachability of service location, including the ease of

finding one’s way around the service environment.

Aesthetics Extent to which the components of the service package are agreeable

or pleasing to the customer, including both the appearance and the

ambience of the service environment, the appearance and presentation

of service facilities, goods and staff.

Attentiveness/

helpfulness

The extent to which the service, particularly of contact staff, either

provides help to the customer or gives the impression of interest in the

customer and shows a willingness to serve.

Availability The availability of service facilities, staff and goods to the customer. I

Care The concern, consideration, sympathy and patience shown to the

customer.

Cleanliness/

tidiness

The cleanliness, neat and tidy appearance of the tangible components

of the service package, including the service environment, facilities,

goods and contact staff.

Comfort The physical comfort of the service environment and facilities

Commitment Staff’s apparent commitment to their work, including the pride and

satisfaction they apparently take in their job, their diligence and

thoroughness.

Communication The ability of the service providers to communicate with the customer

in a way he or she will understand.

Competence The skill, expertise and professionalism with which the service is

executed.

Courtesy The politeness, respect and propriety shown by the service, usually

contact staff, in dealing with the customer and his or her property.

Flexibility A willingness and ability on the part of the service worker to amend or

48

alter the nature of the service or product to meet the needs of the

customer.

Friendliness The warmth and personal approachability of the service providers,

particularly of contact staff, including cheerful attitude and the ability

to make the customer feel welcome.

Functionality The serviceability and fitness for purpose or “product quality” of

service facilities and goods.

Integrity The honesty, justice, fairness and trust with which customers are

treated by the service organization

Reliability The reliability and consistency of performance of service facilities,

goods and staff.

Responsiveness Speed and timeliness of service delivery.

Security Personal safety of the customer and his or her possessions while

participating in or benefiting from the service process.

Source: Johnston and Silvestro (1990)

49

Appendix 2: Projected occupancy rate for Nairobi Hotels from 2009 to 2018

Source: http://www.hvs.com

50

Appendix 3: Number of star rated hotels in Nairobi and respective bed capacity

Hotel Category Number

of Beds

Number of

Guests with

average

occupancy of

55%

Percentage

of the

sample

Number

of

samples

No Five Star Hotels

1 Hotel Intercontinental 770 424 12% 45

2 Laico Regency Hotel 388 213 6% 22

3 Hilton Hotel 353 194 6% 20

4 The Norfolk Hotel 334 184 5% 19

5 Nairobi Serena 283 156 5% 16

6 The Stanley 434 239 7% 25

7 Safari Park Hotel 285 157 5% 17

Three Star Hotels

1 The Bounty Hotel 100 55 2% 6

2 Fair View Hotel 163 90 3% 9

3 Marble Arch Hotel 77 42 1% 4

4 Landmark Hotel 242 133 4% 14

5 Holiday Inn 342 188 6% 20

6 Windsor Golf Country

club

260 143 4% 15

7 Nairobi Safari Club 282 155 5% 16

8 Utalii Hotel 105 58 2% 6

9 Ambassadeur Hotel 190 105 3% 11

Two Star Hotels

1 Panafric Hotel 46 25 1% 3

2 Silver Spring Hotel 188 103 3% 11

51

3 Hotel Boulevard 140 77 2% 8

4 Six Eighty Hotel 680 374 11% 39

5 Sports View Hotel 104 57 2% 6

One Star Hotel

1 Fig Tree Hotel 60 33 1% 4

2 Milimani Hotel 90 50 1% 5

3 Hotel Southern Blue 112 62 2% 7

4 Blue Hut Hotel 100 55 2% 6

5 Karibu Hotels 72 40 1% 4

TOTALS 6200

Beds

3412 Guests 100 358

Source: Source: Kenya gazette, 13th

June, 2003, vol.cv-no.62,

52

Appendix 4: Research Questionnaire

PART 1: RESPONDENT GENERAL INFORMATION

This part is on general information about you as respondent. Please provide answers to the following

questions by ticking (√) against the most suitable alternative or giving narrative responses in the

spaces provided. Your response shall be accorded all the confidentiality it deserves and will only be

used for academic purposes.

Name of Hotel………………………………………………………………………..

Gender: Male [ ] Female [ ]

Age: 18-25 [ ] 26-35 [ ] 36 – 45 [ ] 46 – 55 [ ] above 55 [ ]

Nationality: Kenya [ ] Rest of Africa [ ] Europe [ ] USA [ ] Middle East [ ] Asia [ ]

Other (Specify)…………………………………

Purpose of Visit: Airline crew [ ] Leisure [ ] Business [ ] Meeting/Conference [ ]

Other (Specify)…………………………………

Number of visits to this hotel: First visit [ ] 2 to 5 visits [ ] 6 to 10 visits [ ] more than 10 visits [ ]

PART II: FACTORS INFLUENCING CUSTOMER SATISFACTION

This part concerns the factors that influence your satisfaction with hotel services. Please show the

extent to which you think each factor influences your satisfaction with the hotel services. Do this by

putting a tick (√) in the appropriate box. A “1” means you strongly disagree while a “5” means that

you strongly agree. You may tick any of the number in the middle that shows how strong your

feelings are. There are no rights or wrong answers.

No

Please indicate the extent to which you agree

that the following factors influence guest

satisfaction with hotel services.

Str

ongly

Dis

agre

e

Dis

agre

e

Neu

tral

Agre

e

Str

ongly

Ag

ree

1 Hotel’s Physical facilities 1 2 3 4 5

2 Hotel’s Equipment 1 2 3 4 5

3 Appearance of hotel employees 1 2 3 4 5

4 Communication materials 1 2 3 4 5

5 Timeliness of service 1 2 3 4 5

53

6 Problem solving interest 1 2 3 4 5

7 Efficient service 1 2 3 4 5

8 Consistency of service 1 2 3 4 5

9 Accuracy of records 1 2 3 4 5

10 Problem resolution time 1 2 3 4 5

11 Prompt attention to guest’s requests 1 2 3 4 5

12 Willingness to help 1 2 3 4 5

13 Flexibility of employees 1 2 3 4 5

14 Behavior of employees 1 2 3 4 5

15 Safety and security 1 2 3 4 5

16 Courtesy of employees 1 2 3 4 5

17 Competence of employees 1 2 3 4 5

18 Individualized attention 1 2 3 4 5

19 Convenient operating hours

1 2 3 4 5

20 Personal attention from employees

1 2 3 4 5

21 Concern towards guest interest 1 2 3 4 5

22 Understanding guest specific needs

1 2 3 4 5

PART III: PERCEPTION ON THE QUALITY OF SERVICE

This part concerns how you feel about aspects of service quality levels at the hotel. Please tick (√) in

the appropriate box to show the extent to which you believe the hotel has features described by the

statement. A “1” means you strongly disagree while a “5” means that you strongly agree. You may

tick any of the number in the middle that shows how strong your feelings are.

Dimension of

service quality

Please indicate the extent to which you

agree with the following statements

Str

on

gly

Dis

agre

e

Dis

agre

e

Neu

tral

Agre

e

Str

on

gly

Agre

e

54

1.1: Tangibles The Hotel has good looking facilities. 1 2 3 4 5

1.2: Tangibles The Hotel’s physical facilities are

visually appealing. 1 2 3 4 5

1.3: Tangibles The Hotel’s employees are neat

appearing 1 2 3 4 5

1.4: Tangibles The materials associated with the service

(such as pamphlets) are visually

appealing.

1 2 3 4 5

2.1: Reliability When the hotel promises to do

something by a certain time it does so. 1 2 3 4 5

2.2: Reliability When you have a problem the hotel

shows a sincere interest in solving it. 1 2 3 4 5

2.3: Reliability The hotel performs the service right the

first time. 1 2 3 4 5

2.4: Reliability The hotel provides its services at the

time it promises to do so. 1 2 3 4 5

2.5: Reliability The hotel insists on error-free records. 1 2 3 4 5

3.1: Responsiveness The hotel employees tell you exactly

when services will be performed. 1 2 3 4 5

3.2: Responsiveness The hotel employees give you prompt

service. 1 2 3 4 5

3.3: Responsiveness The hotel employees are always willing

to help you. 1 2 3 4 5

3.4: Responsiveness The employees are never too busy to

respond to your requests. 1 2 3 4 5

4.1: Assurance The behavior of hotel employees instills

confidence in customers. 1 2 3 4 5

4.2: Assurance You feel safe in your transactions with

the hotel. 1 2 3 4 5

4.3: Assurance The hotel employees are consistently

courteous with you. 1 2 3 4 5

4.4: Assurance The hotel employees have the knowledge 1 2 3 4 5

55

to answer your questions.

5.1: Empathy The hotel gives you individual attention. 1 2 3 4 5

5.2: Empathy The hotel’s operating hours are

convenient to its customers. 1 2 3 4 5

5.3: Empathy The hotel has employees who give you

personal attention. 1 2 3 4 5

5.4: Empathy The hotel has your best interest at heart. 1 2 3 4 5

5.5: Empathy The hotel employees understand your

specific needs. 1 2 3 4 5

Source: Cronin and Taylor (1992)